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Catch the sun before it's gone: 2019 is final year for full solar tax credit

1/15/2019 3:19:44 PM

If you've been thinking about installing a solar energy system for your home, the Minnesota Commerce Department suggests that you may want to finally catch the sun in 2019.

That's because 2019 is the last year to claim the full 30 percent Residential Renewable Energy Tax Credit, which applies to solar energy projects (electric or hot water), small wind installations, ground source heat pumps and other eligible renewable energy systems.

This incentive allows you to claim a 30 percent credit on your federal tax return for the costs of the system. Your tax credit on a $20,000 system would be about $6,000, resulting in a dollar-for-dollar reduction on your income tax.

To get the tax credit, you must own the system instead of leasing it. Eligible costs include labor for on-site preparation, assembly or original system installation, and piping or wiring to connect a system to the home.

To get the full 30 percent tax credit, your system must be installed by December 31, 2019, If the installation is at a new home, the "placed in service" date is your date of occupancy. 

The tax credit, which ends in 2022, will phase down over the next three years:

  • 26 percent for systems placed in service after Dec. 31, 2019, and before Jan. 1, 2021
  • 22 percent for systems placed in service after Dec. 31, 2020, and before Jan. 1, 2022

A similar Business Energy Investment Tax Credit is available for businesses, also with a phase-down schedule.

Utility incentives

In addition to the federal tax credit, many Minnesota utilities offer incentives for solar energy and other renewable energy systems.

Xcel Energy’s Solar*Rewards program provides incentives to install solar electric (PV) systems, The program will begin taking applications for its 2019 season on Jan. 28.

It provides residential and commercial customers who install solar PV systems of 40 kW or less with 10 years of annual incentive payments based on the system’s annual production. It is available to Xcel customers on a first-come, first-served basis. 

Minnesota Power provides solar incentives to qualified customers through its SolarSense program and began taking applications for 2019 on Jan. 7. The program provides rebates to reduce the upfront costs of installing solar.

Otter Tail Power offers a Publicly Owned Property Solar program that provides cash incentives to publicly-owned facilities that install non-residential solar PV systems.

To learn about other incentives available for solar and other clean energy improvements, contact your utility or visit the Database of State Incentives for Renewables & Efficiency at www.dsireusa.org.

Minnesota Energy Tips is provided twice a month by the Minnesota Department of Commerce, Division of Energy Resources. If you have an energy question, contact the Commerce Department's Energy Information Center at energy.info@state.mn.us or 800-657-3710.

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